Is it Expensive? The Dual Effect of Construal Level on Price Judgments

Abstract

When judging the expensiveness of a product or service, consumers often make comparisons to similar offerings that serve as reference points. Extant pricing literature shows that reference items in the consideration set may trigger a “contrast effect,” where higher-priced items make the target item seem less expensive. Two studies show that the effect of reference price depends on the consumer’s level of abstract thinking—or “construal level” —at the time of judgment. Concrete construal leads to the standard contrast effect, but abstract construal leads to an assimilation effect, where higher-priced reference items make the target seem more expensive.